Michael McGrath
Question:195. Deputy Michael McGrath asked the Minister for Finance the revenue that would be raised from applying DIRT to State savings schemes; and if he will make a statement on the matter. [39559/13]
View answerTuesday, 24 September 2013
Questions (195)
Written answers
I am advised by the National Treasury Management Agency (NTMA) that the latest figures available on interest payments on State Savings accounts are for 2012. As the Deputy may be aware, the NTMA announced reductions in the interest rates across the full range of State Savings products in December 2012. This was done at a time when rates in the deposit market generally were coming down, and with the objective of remaining competitive while not incurring interest costs above the levels generally prevailing in the market on Government borrowings. This would mean that the future interest payments from State Savings products will be lower, which in turn means the yield from imposing DIRT on State Savings would be less than would be suggested by applying the DIRT rate to the interest paid in 2012. Having said that, the NTMA advises that interest payments on those State Savings which are not liable to DIRT were as follows in 2012:
|
Savings: |
€ |
|
Savings bonds |
€138.383 million |
|
Savings certs |
€72.627 million |
|
Instalment savings |
€18.351 million |
|
Total |
€229.36 million |
Applying DIRT at a rate of 33%, the rate which prevailed in 2012 where interest is paid less frequently than annually, to the foregoing interest payments would have produced a yield of c. €75.66 million. This projection assumes that all account holders are liable to pay DIRT.
Prize bond prizes are tax-free and amounted to €47.61 million in 2012. To apply DIRT to such prizes would yield in the region of €15.71 million (again applied at the higher rate, which was 33% in 2012, and assuming full liability applies to all holders).
As noted, the interest payments on State Savings products are likely to be lower in future years, with a consequent effect on the possible yield from imposing DIRT on such payments. The figures also do not take into account the potential behavioural impact of making the interest subject to DIRT.
State Savings products provide a convenient and State assured method of saving for members of the public. The funds invested provide the State with a low cost form of borrowing. To encourage participation by savers in order to ensure this funding remains available, the interest on Savings Bonds, Savings Certificates, National Instalment Savings, prizes related to Prize Bonds, and the payment on maturity for the National Solidarity Bond are and have traditionally been tax free.